Absenteeism at record low

Absence from work in the UK has dropped to a new record low, according to research by the Confederation of British Industry (CBI).

The CBI/Pfizer Absence and workplace health survey, which questioned HR managers in 153 organisations employing 850,000 people across the UK, found the average absence rate was 5.3 days in 2012, down from 6.5 days in 2010, saving UK business £3 billion.

The research found that absence rates in both the public and private sector were down to 6.9 (from 8.1) and 4.9 (from 5.9) days, respectively.

The research also found:

Mental health conditions emerged as the single most widespread cause of long-term absence from the workplace, with 54% of employers citing non-work related stress, anxiety and depression as a cause of long-term absence for non-manual workers, and slightly fewer (42%) for manual workers.

Almost £1.8 billion was lost from an estimated one-in-eight sick days taken for non-genuine reasons, with one in five employers believing employees take sickies as an occasional perk.

Two-thirds of employers claim the new fit note system is not being used to its full potential.

Neil Carberry (pictured), director of employment and skills at the CBI, said: “The record low shows employers are getting much better at tackling the root causes of absence.

“This is down to stronger staff engagement, initiatives to foster employee health and better re-integration plans after longer-term sick leave.

“But there is no room for complacency. Clearly, when staff are sick, they should not be in work, but there’s a lot more employers can do to tackle absence at a time when growth is fragile.”

Jonathan Emms, UK managing director at Pfizer, added: “It is welcome news that absence from the workplace has fallen to record low levels.

“The report highlights the importance of early intervention and proactive management strategies in tackling the underlying causes of absence.

“By drawing together data on both absence trends and management strategies, this report highlights how greater progress can be made towards maximising wellness, minimising illness and helping people to stay in, or get back to, work.”

It would be surprising if, on the back of auto-enrolment and the potential large increases in pension savers, the Treasury didn’t want to look hard at the rising cost of tax relief and review the current arrangements in force from a ‘value for money’ point of view.

This report from the PPI is therefore very timely and is likely to be scrutinised closely both within government and across the pension and savings industry more widely.

It would be a massive mistake, in my view, to make any further major cut-backs on overall pension tax relief beyond those already made in recent times, for example to the annual and lifetime allowances. The reverberations from the infamous Gordon Brown raid on pension funds in 1997 are still with us and have undoubtedly played a part in the subsequent decline in final salary scheme provision, if not in pension saving more widely.

That said, it is true that at the individual-level pension tax relief is poorly understood by savers. We need a simpler and more transparent system to get across the value of the relief being provided. All payments made into a workplace pension plan, for example, need to spell out to the contributor how much extra is being put in by both the employer and the government on their behalf.

It has to be acknowledged that pension tax relief does tend to favour higher-rate tax payers who benefit most from the £35 billion currently paid out. There may be a case for standardising the level at a single rate of around 30% and capping the tax-free lump sum people can take at retirement at a reasonably high level, but great care needs to be taken on possible impacts and consequences.

However, any pressure to scrap the tax-free lump sum altogether should be strongly resisted. It would be madness to do so. To many people entering retirement with outstanding debts this is an important and necessary part of their pension plan and its future eradication could adversely affect many individuals’ attitudes towards pensions as an appropriate vehicle for their savings.

The PPI report is a useful analysis of the tax treatment of pensions. However, for many people the amount of money which they choose to put into pensions has got less to do with the tax rates and more to do with how much they can afford to save. Any changes to the tax-relief rates in the midst of auto-enrolment would probably do more harm than good.

Hi there just wanted to give you a brief heads up and let you know a few of the pictures aren’t loading properly. I’m not sure why but I think its a linking issue. I’ve tried it in two different internet browsers and both show the same outcome.